Patrick Goldstein and James Raineyon entertainment and media

Like it or not, Relativity's Ryan Kavanaugh is now a bona fide studio mogul

July 23, 2010 | 5:01
pm

It's amazing how many studios have bitten the dust lately. MGM is flat on its back, Miramax is pushing up daisies, New Line has been absorbed into Warners while DreamWorks is now part of the Disney brand factory. Warner Independent and Paramount Vantage and Picturehouse are all kaput. But we've finally got a new studio mogul in town, Relativity's Ryan Kavanaugh, who is quietly in the midst of transforming Relativity into a real studio, having now acquired Overture Films' distribution and marketing operations from Starz.

Kavanaugh says that he's keeping Overture's marketing chief Peter Adee and distribution boss Kyle Davies, along with much of its remaining staff. Kavanaugh isn't saying much else so far, though, according to this post in Variety, he is full of praise for Adee and Davies, along with Starz, which he commends for "its smart leadership in helping us make this move."

It's a big move, since up until now Relativity has been putting its movies out through other studios, mostly at Sony and Universal. But now, with Kavanaugh having secured himself a pay-TV deal via Netflix, he's ready to roll out his own movies, including the genre-oriented fare he's been making through Rogue. What makes this especially fascinating stuff is that Kavanaugh doesn't do things the old-fashioned studio way. He decides what pictures to bankroll through a complex, "Moneyball"-style set of mathematical formulas that are designed to eliminate most of the crippling flops that have often led past indie financiers into crash 'n' burn infamy.

According to this slightly wide-eyed story from Esquire, before Kavanaugh agrees to finance a picture, its particulars (principal actors, budget, genre, filmmaker, release date, MPAA rating) are "fed into an elaborate Monte Carlo simulation, a risk-assessment algorithm normally used to evaluate financial instruments based on the past performance of similar products.... After running the movie through ten thousand combinations of variables, the computers will churn out a few hundred pages that culminate in two critical numbers: the percentage of time the movie will be profitable and the average profit for each profitable run. Unless the movie shows the distinct probability of a return--no one at Relativity will reveal the precise green-light figure, but it's something like 70 percent--the script gets shredded."

In other words, Kavanaugh makes no bones about his ulterior motive, which is profit, not art. He doesn't believe in big risks, preferring to hit solid singles and doubles, and occasional triples, like "Paul Blart: Mall Cop." As he told Esquire: "Everything has to run on the principle of profit. We'll never let creative decisions rule our business decisions. If it doesn't fit the model, it doesn't get done."

Of course, Kavanaugh backed "The Assassination of Jesse James by the Coward Robert Ford," a classic example of a misguided, and almost comically over-budgeted, art picture that lost a fortune, so I'm guessing he's still tinkering with that sophisticated computer formula. After all, you can only take statistical analysis so far, since "Moneyball's" hero, Oakland A's general manager Billy Beane, has been to the playoffs but never come close to winning a World Series.

On the other hand, the guys who ran Overture into the ground--Chris McGurk and Danny Rosett--were no great shakes at picking pictures either. I'm of the mind that Hollywood is still a lot like a Vegas casino, where you can get hot and have a great run, but you're never gonna beat the odds all the time. Still, it will be nice to have Kavanaugh around, playing with the big boys. Like so many brash younger entrepreneurs of his generation, whether it's Mark Cuban, Jay Z or Ari Emanuel, Kavanaugh is smart, always eager to try something new and, best of all, he's never going to be dull.